Daily Archives: February 12, 2015

Electric cars charging in Milton Keynes (Image: T. Larkum)

Oil industry cuts jobs and exploration budgets in response to falling prices

Oil prices slumped to a six-year low earlier this week. In response, oil companies around the world have been cutting jobs and exploration and production budgets.

Electric cars charging in Milton Keynes (Image: T. Larkum)
Electric cars charging in Milton Keynes (Image: T. Larkum)

The situation has become worrying enough that the UK government today ordered a review into how low prices put the North Sea industry at risk.

For months, analysts have warned of the effect such a price dip could have on the industry.

This week, a number of companies, including fossil-fuel giants Shell and BP, announced they were reducing their budgets for 2015 and cutting hundreds of jobs as a consequence of the low oil price.

Carbon Brief looks at the cuts some of the industry’s key players are making in response to the oil price drop.

Cutting budgets and jobs

The oil price is currently around $48 per barrel, down from a high of about $115 last July. Lots of oil companies have had to adjust their budgets as a consequence. In particular, they’ve had to revise how much they’re going to spend on new projects, known as ‘capital expenditure’, or ‘capex’ for short.

Companies put jobs at risk when they reduce their capex budgets, as fewer projects mean fewer workers are needed.

Read more: Carbon Brief

US Fracking Is A Very Large Red Herring

Jeremy Grantham is not a believer in the shale fracking boom.

Back in November, we highlighted Grantham’s full quarterly letter to GMO clients, in which he said, among other things, that the US shale boom had been “a very large red herring.”

So while some say the fracking boom has helped keep oil prices low and aided the US on its path to energy independence, Grantham thinks it might have set us on a path to nowhere.

“Its development has been remarkable,”

Grantham writes.

“It will surely be seen in the future as a real testimonial to the sheer energy of American engineering at its best, employing rapid trials and errors — with all of the risk-taking that approach involves — that the rest of the world finds so hard to emulate. Similarly, it will always stand out as remarkable proof that, so late in the realization of the risks of climate change and environmental damage, the US could expressly deregulate such a rapidly growing and potentially dangerous activity.”

The overall thrust of Grantham’s letter is that the world will soon be devoid of the resources it is going to need to sustain our current economic model, which over the past 150 or so years has been predicated on cheap energy, namely oil.

A concern Grantham has with fracking is that the boom hasn’t been accompanied by any real concern as to the environmental damage it may be inflicting. But Grantham is also hugely skeptical on the potency of the shale boom because it doesn’t address the problem of our need for cheap oil.

Grantham writes:

Fracking “has not prevented the underlying costs of traditional oil from continuing to rise rapidly or the cash flow available to oil-producing countries like Saudi Arabia, Iran, and especially Venezuela from getting squeezed from both ends (rising costs and falling prices).”

And as we saw last week, OPEC announced that it would not impose production cuts despite the sharp decline in oil prices seen over the past few months, and it seems unlikely that Grantham would be surprised by this.

Because if your national economy is chiefly predicated on exporting oil, you have made your bed and therefore must lie in it as oil prices drop.

Read more: Business Insider

Mitsubishi Outlander PHEV (Image: AutoExpress)

Mitsubishi Outlander PHEV review

Game-changing Mitsubishi Outlander PHEV plug-in hybrid SUV can deliver 148mpg and CO2 emissions of just 44g/km

Verdict: 4 stars
The Mitsubishi Outlander PHEV is a refined SUV with some impressive economy figures that cars of a similar size simply cannot match. It’s not a particularly scintillating drive and the ride is a bit unsettled, but Mitsubishi have built something worth looking at if you’re after a 4×4 with plenty of space and ultra-low running costs.

The Mitsubishi Outlander PHEV became the world’s first plug-in hybrid SUV when it went on sale early in 2014. With a high-tech powertrain and headline economy figures of 148mpg and 44g/km of CO2, it’s made a big impact on the UK car market, particularly among company car drivers.

Thanks to the £5,000 Government plug-in car grant, the Outlander PHEV prices range from just over £28,000 for an Outlander GX3h to £40,000 for the top-spec GX5hs. With the GX4h and GX4hs in the middle of the line-up, overall prices for the PHEV are largely the same as for the equivalent diesel Outlanders, giving buyers an interesting decision.

Further efficiency and economy benefits from owning an Outlander PHEV include exemption from road tax and the London Congestion Charge. Although, electric cars have previously enjoyed a zero per cent Benefit in Kind (BIK) company car tax rate, as of April 2015 rates are going up. Owners of cars such as the Outlander PHEV will still only be liable for the five per cent tax bracket.

On the road, it’s no surprise that the Mitsubishi Outlander PHEV is much quieter than the regular diesel Outlander, no matter which mode the car is operating in. Be it petrol engine and electric motors working in sync, or as a pure EV, the PHEV is extremely hushed.

The impressive refinement of this Mitsubishi hybrid is due to enhanced sound deadening throughout the car, but also thanks to the hybrid powertrain, which favours running in all-electric mode. The petrol engine is noticeable when you start the car up, but it’s never overly loud or intrusive.

Read more: Auto Express